The CEC will stop any ‘bail-in’ of Australians’ savings deposits. Bail-in is the international policy devised following the 2008 GFC to ostensibly avert the need for a taxpayer ‘bailout’ of banks through a ‘bail-in’ of bank creditors, which includes depositors. To prop up failing banks, regulators write off, or convert into effectively worthless shares, a percentage of the deposits of their customers.
Following the first bail-in of banks in 2013, in Cyprus, the CEC exposed and fought the Australian government’s plans to legislate bail-in here. The government denied any such plans, but on 14 February 2018 it snuck legislation through Parliament giving the bank regulator APRA crisis resolution powers to bail in certain instruments, but with wording so broad that CEC legal advice identified it could extend to deposits.
In February 2019 the IMF demanded the Australian government implement a full bail-in system. The CEC will rescind APRA’s bail-in powers, and the Separation of Banks bill will bring APRA under much tighter Parliamentary control.
For background on the Bail-in policy and the CEC’s fight against it read through the following pages.